I admit it has been a long time I took grade school math and some of the “new” math my son comes home with makes no sense at first, but the math we hear from the politicians is just mind-boggling!
First we are told we are in the middle of an economic credit meltdown. The banks are burdened with billions of dollars of sub-prime mortgages that are going into default…people are loosing their homes and if the politicians don’t bail out the banks the whole banking sector will collapse. After much debating and “calculating” a figure of
$700 billion, if injected into the banking system would avert this disaster. Well everyone was outraged that the taxpayers would have to bail out the banks for something they caused with their own greed. So the politicians added another $150 billion of “PORK” to get this package passed.
We now find out that there were no conditions attached to the bailout and the banks receiving this money are not using it as liquidity to make new loans available to qualified individuals or businesses. They are not even using this money to pay off or retire all those bad loans. Rather they are buying up assets or smaller distressed banks and of course paying the CEOs their hard earned bonuses.
So now the politicians in their wisdom are negotiating to buy half of the bad mortgages if the banks will renegotiate the credit terms. The cost…. $55 billion.
Now if my math is right, if $55 billion is half of all the bad loans then $110 billion is ALL of them. Which means that the politicians could have bought out all those bad loans for $110 billion as soon as this credit “crisis” started.
So my question is how in the world did they come up with $700 billion in the first place?
Is my math wrong or does one plus one really equal eleven!
This just in – it now seems that the Treasury department has changed its mind. It no longer wants to buy “distressed” assets from the banks but rather regular assets. This was not what was agreed to and passed in both Houses! Do these guys even know what they are doing?
Tom Laios
http://tomlaios.blogspot.com
